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A group of major consumer electronics companies are partnering
to create a new video copy-protection scheme based on digital
"watermarking" technology.

Digimarc, Hitachi, Macrovision, NEC, Philips Electronics,
Pioneer and Sony this week said they are forming the Video
Watermarking Group to give film studios means to distribute
content online without the fear of potential copyright pirates.
Digital security has been heating up, with many high-tech
companies working to devise schemes for embedding digital
watermarks within audio and images, such as print or film. Such
watermarking technology places a unique bit of digital code into
a file that is theoretically difficult to remove without
damaging the quality of the sound or image.

The move to create watermark technology for videos also comes as
Hollywood is looking to beef up its copy-protection scheme for
DVDs and other digital formats. Hackers have cracked the
previous standard with a code known as DeCSS, spawning a series
of lawsuits aimed at keeping the DVD circumvention code off the
Internet.

Many technologists say watermarking is better suited to tracking
content than it is to protecting against reproduction. Unlike
encryption, which scrambles a file unless someone has a "key" to
unlock the process, watermarking does not intrinsically prevent
use of a file. Instead it requires any player--a DVD machine or
MP3 player, for example--to have instructions built in that can
read watermarks and accept only correctly marked files.

Hardware manufacturers have traditionally been skeptical of this
kind of approach, because of the need to be able to play back
CDs or DVDs that were created without watermarks included.
Critics of the approach also say it is not difficult to strip
out watermarks, making files appear as though they lack
protection.

As watermarking builds tension between academics and the music
industry, it remains to be seen whether it will be a feasible
copy protection method for the film industry.

The Video Watermarking Group "may be able to provide a unified
solution to alleviate the movie industry's fears," said P.J.
McNealy, an analyst at research company Gartner. But, "it comes
back to the fundamental issue that the copyright holders still
hold the keys here. It's copyright holders who will dictate what
the security measures are for their materials."